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Our Path Back

Kevin McCarthy on the 2010 mid-terms and the GOP’s class of recruits

Spring 2010 Volume 44, No. 2

“Americans cannot afford the luxury of believing that this war is over...

“It’s Not over” Fran Townsend on the need to maintain our sense of urgency in the fight against terror

Plus: Mac Thornberry on the debate over Guantanamo Bay and why closing it does not make sense And: Susan Urahn on the growing pension crisis in America www.riponsociety.org

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“Ideas that matter, since 1965.“ Volume 44, No. 2, Spring 2010

Politics & Perspective 4 Our Path Back by Kevin McCarthy 7 The Safety of Our Youth by Mike Castle 9 The Foundation of Military Readiness by Kay Granger

Articles (cont’d.) 19

The Sino-American Relationship by Carla A. Hills The former Trade Representative looks at trade with China and explains why it is critical to U.S. economic growth.

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A Great Time to Start a Business by Dan Danner The head of the nation’s leading small business group discusses the rise of entrepreneurship and what Washington can do to help

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Another Bellwether from Massachusetts by David Tuerck The Bay State’s opposition to Project Labor Agreements sends a clear signal to the Obama Administration and its union allies.

25 14 Learning Lessons the Hard Way By Mac Thornberry One of the most respected experts on national security and public diplomacy in Congress looks at the President’s decision to close 27 Guantamo Bay and explains why security must come before symbolism. Articles

Driven to Distraction by Billy Pitts The American people are receiving mixed messages from Washington when it comes to text bans and technology in our cars.

Cover Story 11

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It’s Not Over A Q&A with Fran Townsend The former Homeland Security advisor and veteran prosecutor discusses the war on terrorism and cautions that we must not lose our sense of urgency in the effort to keep America secure.

You Say You Want a Revolution? by Lou Zickar If the Tea Party movement opposes John McCain’s bid for reelection to the Senate, a new political party could be the result.

Preventing the Next Crisis Sections by Susan Urahn As the U.S. recovers from the Great Recession, 3 In this Edition another crisis looms on the horizon — this one involving the solvency of pension funds. 28 Ripon Profile of John Hoeven

Publisher The Ripon Society President & CEO Jim Conzelman Editorial Board William Frenzel Billy Pitts

Editor Louis M. Zickar Editorial Assistants Stephen Jackson Maura Reilly Jamarie Copestick © Copyright 2010 By The Ripon Society All Rights Reserved

One Year Subscription: $35.00 individuals $10.00 students The Ripon Forum (ISSN 0035-5526) is published by The Ripon Society. The Ripon Society is located at 1300 L Street, NW, Suite 900, Washington, DC 20005. Postmaster, send address changes to: The Ripon Forum, 1300 L Street, NW, Suite 900, Washington, DC 20005.

RIPON FORUM Spring 2010

Comments, opinion editorials and letters should be addressed to: The Ripon Forum, 1300 L Street, NW, Suite 900, Washington, DC 20005 or may be transmitted electronically to: editor@riponsociety.org. In publishing this magazine, The Ripon Society seeks to provide a forum for fresh ideas, well-researched proposals, and for a spirit of criticism, innovation, and independent thinking within the Republican Party.


Comcast and NBC Universal— What we can do together. Together, we’ll launch a new era of digital innovation, speeding up the promise of an “anytime, anywhere” video future. And in doing so, we will make it easier and faster for consumers to access more of the content they want across more platforms than ever before. Together, we’ll foster a more innovative and competitive landscape. Entertainment programming is dynamic and highly competitive. Competition makes everyone work harder to deliver better products and services for consumers. Combining Comcast and NBC Universal will spur our competitors to innovate, too. Together, we’ll expand local broadcast, news and public interest programming by increasing the amount, diversity and quality of programming, including 1,000 additional hours of locally produced news and informational programming each year. We’ll also preserve the journalistic integrity of NBC News and the NBC Universal news outlets, and we’ll invest to keep free over-the-air broadcast TV healthy. Together, we’ll promote program diversity, by expanding the quality, variety and availability of programming content. This includes a commitment to increase the amount of programming for Spanish-speaking audiences through Telemundo and mun2. Together, we’ll work with the growing number of competing video programming distributors to deliver consumers the content they want anytime, anywhere. We want viewers to enjoy our content, so we have the incentive to distribute it as widely as possible. And even after Comcast and NBC Universal partner, six out of every seven channels on Comcast cable systems will still be unaffiliated with Comcast. Together, we’ll expand online video choices, bringing you the future, faster. Comcast already offers our customers more than 19,000 TV shows and movies online at no additional cost. With our NBC Universal partnership, we want to leap to the next level and expand online choices for all our customers. So do dozens of other competitors in this wide-open marketplace. It will be a great race, and consumers will win. More Local Programming. More Diverse Programming. More Online Video. More Competition. Learn more at comcast.com/nbcutransaction

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THE RIPON SOCIETY Honorary Congressional Advisory Board U.S. Senators: Pat Roberts (Senate Chairman) Richard Burr Susan M. Collins Judd Gregg Orrin G. Hatch Olympia Snowe U.S. Representatives: Thomas E. Petri (House Chairman) Steve Austria Spencer Bachus Judy Biggert Roy Blunt Mary Bono Mack Charles Boustany Ginny Brown-Waite Vern Buchanan Michael C. Burgess, M.D. Ken Calvert Dave Camp Eric I. Cantor Shelley Moore Capito Michael Castle Howard Coble Ander Crenshaw Geoff Davis Charlie Dent Vernon Ehlers Jo Ann H. Emerson Rodney Frelinghuysen Jim Gerlach Kay Granger Wally Herger Darrell Issa Walter Jones Leonard Lance Steven LaTourette Chris Lee Jerry Lewis Kevin McCarthy Thaddeus McCotter Candice Miller Todd Platts Adam Putnam Dennis Rehberg Aaron Schock Mac Thornberry Pat Tiberi Mike Turner Fred Upton Greg Walden Edward Whitfield Retired Members of Congress: Bill Frenzel (Chairman Emeritus) Bill Archer Henry Bonilla Mike Ferguson J. Dennis Hastert David Hobson Nancy Johnson Sue Kelly Jim McCrery Robert H. Michel Susan Molinari Don Nickles Michael G. Oxley Deborah Pryce Tom Reynolds Tom Ridge E. Clay Shaw Gordon Smith Don Sundquist Robert S. Walker

In this Edition

The Administration of George W. Bush had many faults. But one thing you could never fault it for was failing to remember that the first priority of the federal government is to keep America secure. Ever since a young Nigerian nearly blew up an airliner on Christmas Day, questions have arisen over the Obama Administration’s own priorities in this regard. The problem is not the President. Some have criticized the conciliatory tone he has expressed abroad, but when it comes to national security, he has largely kept his eye on the ball. The same cannot be said for members of his Cabinet. Attorney General Eric Holder is a prime example. From his support for reading the Christmas bomber his Miranda Rights to his decision to try Khalid Sheikh Mohammad in New York City instead of a military tribunal, he has given every indication that he views the terrorist threat as a crime and not an act of war. In the process, he has raised real questions about the Administration’s broader commitment to keeping our nation secure. We take a look at this commitment and this continuing threat in the latest edition of The Ripon Forum. We do so with an interview with someone who knows the issue better than most -- Fran Townsend, who served as Homeland Security Advisor under President Bush and played a key role in developing the policies that have kept our country free of attack since 9/11. We also hear from one of the foremost experts on national security and public diplomacy in the House of Representatives – Texas Congressman Mac Thornberry – who looks at the Administration’s decision to close Guantanamo Bay and explains why it doesn’t make sense. National security will likely have a role in the mid-term elections. But what is really going to drive people to the polls this November are the candidates on the ballot and the messages they convey. As Republican rising star and Chief Deputy Whip Kevin McCarthy writes for us, this year’s class of GOP recruits is the best since 1994, and will put the party in an excellent position to win back the House. As the U.S. recovers from the Great Recession, another crisis looms on the horizon -- this one involving pension funds. The Pew Center looked at this growing problem recently, and Susan Urahn, the Managing Director of Pew’s Center on the States, dissects the challenges we face and the steps that should be taken to keep things from getting worse. Even though the economy has been struggling, Dan Danner of the National Federation of Independent Business writes that a surprising number of entrepreneurs have used the downturn to get their own businesses off the ground. He also writes that Washington has a responsibility to make things easier for entrepreneurs, not stand in their way. And in our Ripon Profile this edition, we focus on another rising star of American politics – Governor John Hoeven of North Dakota – who is running for the Senate this year, and who all Americans will likely be hearing more about soon. As always, we hope you enjoy this edition of The Forum, and encourage you to contact us at editor@riponsociety.org with any comments you may have. RIPON FORUM Spring 2010

Lou Zickar Editor The Ripon Forum 3


Politics & Perspective

Our

Path Back

KEVIN MCCARTHY However, one thing we do and sometimes painful cost cutting What a difference a year understand is that those running decisions. Washington’s disconnect makes. Just think, nearly a year ago, Washington are incapable of listening. became clearer by the day. Time Magazine asked, “So are the Case in point -the deeply unpopular Washington’s disconnect is Republicans going extinct?”, and 2,000 plus page health care bill putting our country’s future at stake, James Carville was gloating with that was rammed through his newly minted book, Congress with the shady “40 More Years: How the tactics of back room deals, Democrats Will Rule the Next special interest favors, and Generation.” giveaways. Today, things have America has had changed and the environment enough. Today, millions of is reminiscent of past wave Americans are fighting for elections. Recently, the a new direction based on Washington Post reported liberty, common sense, and a that, “Political handicapper government where they have Charlie Cook said that it was a voice.  More people are ‘very hard to come up with involved in politics than ever a scenario where Democrats before. There are fresh faces don’t lose the House…’” and new ideas. Our party is How did this happen? stronger because of this. We weren’t ready to accept Reminiscent of the leadthis pontification of defeat, up to 1994, Republicans are especially with the bad now in charge of governor’s policies coming out of mansions in two previously Washington.  blue states – New Jersey In Washington’s first and Virginia. And earlier 100 days under complete this year, a truck-driving Democratic control, a trillion Republican armed with the dollar stimulus bill was voice of the people won Ted passed with the promise that Washington’s disconnect Kennedy’s Senate seat.  unemployment would remain is putting our country’s future Today, our party’s below 8.0%; exactly one existence is no longer at stake, and we are not going to year later, unemployment questioned. Republicans are is 9.7%. Democrats also just stand by and watch filled with deep resolve to approved a budget blueprint it happen. create a stronger future, and I that would triple the national have seen this firsthand. debt in ten years, and This summer, I embarked on a and we are not going to just stand by increase Washington spending by candidate recruitment road trip that and watch it happen. Anyone listening percentages in double-digits. And started in the President’s home state to Americans can’t comprehend how this spending spree came at the same and concluded in Tennessee. On the Washington could borrow so much time that hundreds of thousands of way I met Steven Fincher, a cotton from our children’s generation with so Americans were losing their jobs, farmer from Frog Jump, Tennessee little to show for it. forcing their families to make difficult 4

RIPON FORUM Spring 2010


who told me he was concerned that Washington’s reckless ways would damage his children’s future. Steven said he had had enough and he was going to challenge Congressman John Tanner in Tennessee’s 8th district. Rep. Tanner had been viewed as untouchable - with over a million dollars in the bank and a strong reelection record (the lowest vote percentage he ever received was 62 percent). In just a few months, the cotton farmer from Frog Jump raised over $600,000 and Tanner subsequently decided to retire. The road back for America starts like this -- one district at a time with a candidate who has the fire in the belly to take on the status quo. Throughout the year, Reps. Lynn Westmoreland, Judy Biggert, Geoff Davis, Jim Jordan, Bill Shuster, Pete Olson, Cathy McMorris Rodgers, Tom Price and I all meet regularly to find the best recruits. We are an unconventional group, but we resemble a good cross section – athlete, military, mother, moderate, conservative – and are all hungry to change the direction of our country. Shortly before the year ended, our efforts were not unnoticed. National Journal reported “this year, the GOP has done its best recruiting job in several cycles.” The implications of our recruitment efforts are the building blocks to earning a House majority and a new direction for America. As we know, the Constitution gives Congress the power to control government spending (Art. 1, Sec. 9). Can you imagine Speaker Pelosi no longer in control of this country’s spending?   We can. And today, we have an exciting and diverse field of candidates in every state -- from doctors, to veterans, to small business owners -- ready to make that a reality. These include candidates like Adam Kinzinger in Illinois, who is just over 30 years of age, but with the courage to fight for his country. He served in the Air Force and literally halted a man from killing a

woman across the street from him in Milwaukee one night. Southeastern Wisconsin Red Cross named him hero of the year for this courageous act. The list of fresh face recruits also includes Sean Duffy, who is taking on the father of the failed Stimulus, David Obey, in Wisconsin, and traverses across the ocean to Hawaii, where Charles Djou is challenging the status quo and running in President Obama’s native state. To help go on the offensive this year, my good friends Republican Whip Eric Cantor and Congressman Paul Ryan worked with Chairman Pete Sessions to bring our “Young Guns” program into a candidate development program at the NRCC. This program gives candidates benchmarks to grow

The road back for America starts like this -one district at a time with a candidate who has the fire in the belly to take on the status quo. stronger. With this, we also have the opportunity to showcase these top candidates that include our first round of Young Guns that have progressed through the three stages – Lt. Col. Allen West in Florida, Maj. Vaughn Ward in Idaho, Councilwoman Martha Roby in Alabama, Former U.S. Attorney Patrick Meehan, and Lt. Col. Steve Stivers in Ohio, to name a few. Throughout the year, we will be updating our list of Young Guns as they progress through the program. With strong recruits like this, and America demanding a new direction, I believe that if the election were held today, we’d have a really good night. Just look at the leading indicator of the generic ballot done by Gallup - it’s a historic rarity because it has Republicans leading by four points (48-44). Gallup notes that past years RIPON FORUM Spring 2010

when Republicans actually led were good years for Republicans -- 1994 and 2002. Another fact to note is that Gallup polls “registered voters”; if “likely voters” were surveyed, experts believe you can add another four points. Like the New Jersey and Virginia gubernatorial elections earlier this year, where 74 percent of Virginians and 68 percent of New Jersey voters said they voted for the GOP candidate to send a message to the Obama administration that they were unhappy with the direction they are taking the country, this country is more than ready for a new direction in 2010. This will be a national election, and the build-up of momentum reflects the frustration of the American people towards Nancy Pelosi’s jobkilling agenda in Washington and shows that Republicans have an opportunity to be successful this November. I experienced this feeling on my most recent road trip that went from Obama’s home state of Illinois to Chris Christie’s state of New Jersey. People want their government back. And we are  developing a commitment to America, which is our opportunity to do just that. We can give the American people a voice in their government again. We will use the Internet and all tools available to us, so that we can start a broader national conversation to develop this agenda.  Together, we aren’t the weak party the media once thought we were. Rather, we are a strong party with new fresh face recruits that is ready to put our nation back on the right track and restore the broken bonds of trust between Americans and Congress.  This is our path back.  RF Kevin McCarthy represents the 22nd District of California in the U.S. House of Representatives. He serves as Chief Deputy Republican Whip. He is also a member of The Ripon Society’s Honorary Congressional Advisory Board. 5


The Safety of Our Youth An issue on which both Democrats and Republicans can – and must – agree MIKE CASTLE Despite our best efforts and billions of taxpayer dollars invested over the years, far too many youth in America move through our nation’s juvenile justice system only to be involved again in crime, drug and gang related activities, and never reach their full potential. As Congress looks to reauthorize the Juvenile Justice and Delinquency Prevention Act (JJDPA), reforms are needed that focus on breaking the cycle to prevent at-risk kids from ever getting involved in criminal activity, and keep them engaged in school, in meaningful afterschool programs, and involved in the community. According to the U.S. Office of Juvenile Justice and Delinquency Prevention, police annually arrest approximately 2.2 million juveniles; 1.7 million cases are referred to juvenile courts; an estimated 400,000 young people cycle through juvenile detention centers; and about 100,000 youth are detained in juvenile jails, prisons, boot camps, and other residential facilities each night. The Annie E. Casey Foundation reports the cost of detaining a young person can be up to $65,000 per youth, per year. We must work together to protect the safety and future of our children, families, and communities by updating our country’s juvenile justice system and providing effective supports and alternatives to at-risk youth. Not only will such change bring families and 6

communities closer together, but it will make our streets safer and ultimately save counties and states millions in detainment-related costs. As Congress considers updating JJDPA, we will explore ways to protect our children from the dangers of adult jails; improve the safety for youth in custody; and perhaps, most importantly, focus on how to prevent youth from getting

involved in the juvenile justice system all together. Studies consistently show that the most effective way to reduce crime in the long-term is to invest in preventionbased strategies that reach at-risk youth before they ever become involved in criminal activity. For this reason, I remain committed to working with my colleagues in Congress on evidencebased policies to prevent juvenile crime and violence by providing at-risk youth with access to safe alternatives. At a recent Youth Violence Prevention Roundtable I held in my RIPON FORUM Spring 2010

home state of Delaware, I learned from teachers, law enforcement, juvenile justice officials, community leaders, and academic leaders about what measures work to keep kids safe in our community, both inside and outside the classroom. These leaders agreed that early childhood programs, mentoring programs, afterschool activities, and community and family involvement are integral in helping prevent youth violence from taking place and helping at-risk youth succeed. In Congress, we must target investment in programs that reach youth before they participate in criminal and violent activities. To this end, I have joined with my colleague Rep. Bobby Scott (D-VA) to introduce the Youth Prison Reduction through Opportunity Mentoring, Intervention, Support, and Education, or Youth PROMISE Act. If enacted, the Youth PROMISE Act would provide for evidence-based and promising practices related to juvenile delinquency and criminal street gang activity prevention and intervention. Specifically, this legislation aims to provide communities with the muchneeded resources and support needed to break the cycle of violence, specifically gang-related youth violence, and to provide at-risk youth access to a safe and educationally enriched environment. Evidence has shown that the majority of juvenile delinquent acts committed occur between the time


when the school day ends and parents challenges would establish a Promise them towards productive alternatives. return home from work. During this Coordinating Council (PCC). Each PCC By supporting evidenceunsupervised time, youth become would consist of law enforcement, court based prevention and intervention increasingly involved in crime-, drugservices, school, social service, health strategies, including those which and gang-related activities. Once foster educational success and kids start down the path of gang community involvement, we We must work together to participation, many will end up can work together to keep youth behind bars and continuing the from falling victim to crime and protect the safety and future cycle of violence. violence. Our nation’s youth can of our children, families, and Now, more than ever, we no longer wait, and I am hopeful must break this cycle before it Congress will consider these communities by updating starts by focusing on prevention. important measures aimed at our country's juvenile justice The Youth PROMISE Act improving our country’s juvenile system and providing effecsupports these efforts by justice system this year. RF engaging youth in positive tive supports and alternatives educational and enrichment to at-risk youth. activities, including afterschool Mike Castle represents the State programs, sports, and of Delaware in the U.S. House volunteering so they can be successful of Representatives. He is the Ranking and mental health, and communityin the classroom and beyond. Member of the Subcommittee on based representatives who would Additionally, parent and Early Childhood, Elementary and collaborate to develop a comprehensive community involvement is critical in Secondary Education. He also serves plan for implementing evidence-based creating a safety net for youth. Under as a member of The Ripon Society’s strategies targeted at youth at-risk or the Youth PROMISE Act, communities Honorary Congressional Advisory currently involved in gangs or other facing the greatest youth gang and crime Board. delinquent activities aimed at redirecting

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Military Families are Fundamental to Military Readiness Kay Granger On September 11, 2001, our nation was attacked and thousands of innocent Americans lost their lives. Less than one month later, American troops were deployed to Afghanistan and have been fighting overseas ever since. The soldiers, sailors, airmen, and Marines have continued to carry the fight forward in a conflict that has lasted longer than World War II. Many of our troops have deployed multiple times, tens of thousands have been wounded, and several thousand have made the ultimate sacrifice. Standing alongside these brave men and women are the military families. The moves, the deployments, the training, the stress of the unknown, all take a toll on the spouses and children waiting home anxiously for their loved ones to return. As a Member of Congress, it is my duty to ensure our troops have the equipment, the training, and the support they need to win on the battlefield and make it home safely. It is vital that this support extend beyond the battlefield and into the home of the soldier. Our troops are conducting the most dangerous of missions, and it is critical that they are exclusively focused on their objective and not burdened with worrying if their families are being cared for sufficiently at home. As a single parent, I know firsthand how difficult it is to raise and care for a family alone. We must realize that funds spent on military family programs such as medical benefits, spousal employment, and military youth programs can be just as important to our success overseas as funds spent on body armor, upgraded weapons, and operating expenses. We also cannot forget the unique sacrifices that many National Guard, Air National Guard, and Reserve 8

families are making for us today. Unlike traditional active-duty units, Guard and Reserve families do not typically live in a military community and may not have the built-in support network that comes from the shared experiences of living in, and among, other military families. Last year I had the opportunity to participate in the Military Families Roundtable discussion, and heard firsthand many inspiring stories of the hardships and challenges that are

facing the families of deployed service members. These families are making the most out of the many support programs we have, but they also highlight areas that we can improve our support for these heroes. To this end, I was proud to be an original cosponsor of the Military Spouses Residency Relief Act, which was signed into law on November 15, 2009. This bill gives spouses of service members the ability to keep their residency in one state if the military orders their spouse to move to another state and they join their spouse in that new state. This measure helps provide RIPON FORUM Spring 2010

some stability for the purposes of taxation, voting registration, and holding a driver’s license. We already allow military service members to do this, and it was past time to give their spouses the exact same benefit. I have also cosponsored the Surviving Spouses’ Benefit Improvement Act of 2009 (HR 2243). This bill would remove the offset between the Survivor Benefit Plan (SBP) and the Dependency and Indemnity Compensation (DIC) for spouses of fallen military service members who would qualify for both. The Survivor Benefit Plan is an insurance policy with premiums that military personnel pay into to ensure their spouse receives a percentage of their retirement pay should they survive the military service member. The Dependency and Indemnity Compensation plan pays a benefit to spouses of military service members who died during their service or because of wounds inflicted during their service. Currently, the Survivor Benefit Plan is offset by payments under Dependency and Indemnity Compensation. This bill would eliminate that offset for surviving spouses, allowing these spouses to receive the full benefits they deserve. Congress was also successful in restoring the Military Spouse Career Advancement Account (MyCAA) program after the military suspended new enrollments. This program, with over 133,000 participants, provides up to $6,000 of Financial Assistance for military spouses who are pursuing licenses, certificates, credentials or degree programs leading to employment in portable career fields. This fills a critical demand considering how often spouses are required to relocate and change their personal and professional


lives. Congress and the Department of very dangerous and demanding missions For military members with families, Defense must make sure this program is we have asked them to do and keep their we must realize that they are making a fully funded. “heads in the game.” I will always stand choice when they join and also when they And, of course, I think the best thing in support of our service members and re-enlist. And that choice is often times we can do for our military families is to their families. not an individual choice, but a choice make sure that their husbands, wives, Our military is different than it was made by a family. Our military force is fathers, mothers come home safely. in previous conflicts. Since the military the highest trained, most battle-tested That’s why I will continue to work draft ended in 1973, we have relied force in our nation’s history, and we must tirelessly to make sure they have the best on an all volunteer force to protect our work to retain these brave and talented equipment and training that individuals. Investment we can give them. We owe in programs that support them nothing less. military families can be a We must realize that funds spent I applaud the efforts key influencer in whether or on military family programs ... can by groups and individuals not these families choose to to highlight the dedication remain in the military. RF be just as important to our success and sacrifice of our military overseas as funds spent on body families. In Congress and Kay Granger represents armor, upgraded weapons, and in the Administration, we the 12th District of Texas must continue to work hard in the U.S. House of operating expenses. to make sure they have the Representatives. She serves support they deserve and as the Ranking Member have earned. Family readiness is a key homeland. Despite the hardships, the of the Appropriations Subcommittee on component of our military readiness. risks and the separation from loved ones, State, Foreign Operations, and Related Ensuring that their families are taken care we are blessed to have selfless individuals Programs. She is also a member of The of back home will allow our forwardwho choose to join our military. We Ripon Society’s Honorary Congressional deployed service members to focus on the cannot take their sacrifice for granted. Advisory Board.

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Cover Story

“Americans cannot afford the luxury of believing that this war is over.

“It’s Not Over” A Q&A with Fran Townsend

Frances Fragos Townsend served as Assistant to President George W. Bush for Homeland Security and Counterterrorism and chaired the Homeland Security Council from May 2004 until January 2008. She previously served as Deputy Assistant to the President and Deputy National Security Advisor for Combating Terrorism from May 2003 to May 2004. Prior to serving the President, Ms. Townsend was the first Assistant Commandant for Intelligence for the U. S. Coast Guard. Before that, Ms. Townsend spent 13 years at the U. S. Department of Justice under the administrations of President George H. W. Bush, 10

President Bill Clinton and President George W. Bush. She served in a variety of senior positions including Counsel to the Attorney General for Intelligence Policy. Ms. Townsend began her prosecutorial career in 1985, serving as an Assistant District Attorney in Brooklyn, New York. She is currently a partner at Baker Botts LLC, where her focus is on Global Security, Corporate Risk and Litigation. The Forum recently spoke with her about the ongoing effort to keep America secure and the Obama Administration’s record in this regard.

RIPON FORUM Spring 2010


RF: Has the United States lost its sense of neighbors are Iraq, Iran, Yemen, and Somalia across the Red Sea, and who has more than 60 percent of the world’s urgency in the war on terror? FT: We are in this regard a victim of our own known oil reserves. We really need to pay close attention and support our success. We are rapidly approaching the tenth anniversary of September 11th, and because there hasn’t been a allies around the world and deal with the threats that we successful attack inside the United States, I fear that see. I just came back from the Middle East. I worry that people take the wrong lesson from that. I fear that the our allies don’t feel confident in our commitment to their lesson they take is that the enemy has receded -- has lost regional security. its determination and will to attack us -- and basically RF: What about the Homeland Security there is no need for the investment in our intelligence and Department? It’s been seven years since it was military capabilities. The problem is, and what those who are still in the established.  Is it still having growing pains, or is fight realize, is the failed attacks -- the failed Christmas it starting to function more smoothly? FT: In fairness, it has had now three secretaries, but Day bomber -- are symptomatic of what is a continuing determination by our enemies in Al Qaeda to attack and I think we are beginning to see it function better. There kill Americans. You look at the continuing increase in are some things they need. We continue to see greater terrorist activities in places like Yemen and Somalia, the need for integration. We continue to see the need for use of Americans like Jihad Jane and Zazi Najibullah, greater information sharing both within the department and I worry that Americans cannot afford the luxury of and across the federal government. These are issues that believing that this war is over. It’s not over. This is an require constant leadership. I do think the Secretary enemy that thinks in terms has paid attention to of millennia. And frankly, The problem is, and what building relationships with often times the Congress and Muslim-Americans and the public and we all think those who are still in the fight state and local [officials], in terms of days, weeks, realize, is the failed attacks … all of which are important. months. They think in terms are symptomatic of what is a We’ve got to be clear that of hundreds of years, which she’s got real priorities on is evident by Al Qaeda’s continuing determination by the counter-terrorism side stated desire to reestablish our enemies in Al Qaeda to and the law enforcement the Caliphate. side that are going to So this continues to be attack and kill Americans. need to be strengthened. a very serious problem, and Immigration enforcement we cannot afford to reduce our commitment to intelligence, law enforcement and is one thing that comes to mind. I worry that last year there were over 26,001 murders the U.S. military. in Juarez, which is on the Mexico side of the El Paso RF: What is your overall assessment of the border. As a former Southwest border governor, she Obama Administration’s record with regard to understands this problem. And frankly we have to be sure that the Department of Homeland Security is focused on homeland security? FT: The President stated after the Christmas Day protecting Americans from that level of violence seeping attempted bombing that the system didn’t work the across our Southwest border. way it was supposed to. He was clearly both angry RF: Generally speaking, do you believe the and disappointed. I worry whenever you’re in power -regardless of Republican or Democratic Administrations United States should try terrorists in criminal -- there is always more to do than you can get done in courts or military tribunals? FT: It’s difficult to answer the question generally. any 24-hour period, which means that priorities are very, Let me say this -- there can be an appropriate role for very important. Of course, if everything’s a priority, nothing’s a both, but I think the administration, if they want to priority. And so while the President is staying focused at retain the ability to do both, must be transparent about the moment on things like health care and the potential what standards and criteria they will apply in making for immigration reform, I worry that we see growing the decision about who goes where. Let me give you a threats overseas that require real commitment and real couple of examples, because I think it will make more attention. Iran is determined to obtain a nuclear weapon. sense. I do not support a criminal trial for Khalid Sheikh Israel is threatened on all sides, upon all borders and with the Palestinians. Look at our ally in Saudi Arabia, whose Mohammad, the 9/11 bomber. I don’t believe, given the RIPON FORUM Spring 2010

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circumstances that led to his capture, that he should be Awlaki in Yemen, and those sorts of individuals are much entitled to the Constitutional protection of Americans more difficult … the Jihad Janes are much more difficult who violate criminal law. I don’t think we ought to be to uncover and disrupt. treating them the same. 9/11 was an act of war and must And so while I think that the Al Qaeda core is weaker, be treated as such. That doesn’t mean that I don’t think we face a different kind of threat which is, in many ways, they’re entitled to some level of due process, which they more difficult to target. can get in the military tribunals. The Attorney General, when asked about this very notion, has said that we’ll RF: What one area worries you the most with read bin Laden his Miranda Rights to his corpse. Well, regard to our security and the potential for another it’s all very cute and sort of snide but it doesn’t answer attack? the question – “What happens?” FT: The federal government is the only place where And we’ve seen General McChrystal, our commander we can really target what I call the low probability/high in Afghanistan, was clearly consequence events like a uncomfortable with that weapon of mass destruction. because he made a statement For that reason alone, that saying he remained focused must continue to be a focus on capturing bin Laden. of the federal government. Frankly, what it doesn’t We know Al Qaeda has answer is -- what happens if stated its intention to use a you do catch him alive? And weapon of mass destruction to come back to my point, we if it can obtain it. So we have a right to know what have to continue to focus standards the administration our intelligence and law will apply in deciding which enforcement community on venue they are going to use. that threat. And we don’t know that But my current right now. worry, frankly, and the You know, I was in more immediate concern the department during the that I have, is about the Clinton Administration when high probability/low the East Africa Embassy consequence event – the bombers were tried in Lower other end of the spectrum, Manhattan. And that worked if you will – which is the fine. But the circumstances of individual suicide bomber. their capture and confinement We’ve degraded Al Qaeda’s I do not support a criminal trial were entirely different. I’m overall capability and so for Khalid Sheikh Mohammad, not suggesting a criminal trial they’ve had difficulty trying the 9/11 bomber. … 9/11 was an can’t work. But I think you to launch a spectacular, need to be very clear about big attack with multiple, act of war and must be treated the criteria used for making simultaneous events. But as such. those decisions. what that means is now you worry about the “underwear RF: Is Al Qaeda stronger or weaker today than bomber” and the Zazi case with backpack bombs on it was on 9/11? subway trains. And I think that underscores our need FT: I think the Al Qaeda core -- the central command for a stronger, better relationship with our state and -- is weaker. The current administration has continued the local partners, because those are the people on the policy of the Bush Administration in terms of the use of frontlines when it comes to the individual one-off type lethal predator attacks in the tribal areas, targeting known of attacks. Al Qaeda operational leaders, which has been incredibly And we’ve got to be sure that we are sharing effective at degrading Al Qaeda’s central capability. information with them, getting information to them, That said, what we are seeing is a transformation of the helping them to prepare, because that type of attack threat. is going to happen in those communities and we We see individuals who self-radicalize or who are really owe them the necessary information to stop merely loosely affiliated and get their inspiration from Al it and the resources if they can’t stop it to respond Qaeda. They use the Internet, they use preachers like Al appropriately. RF 12

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Learning Lessons the Hard Way MAC THORNBERRY A high priority for President Obama has been to improve them the full rights and privileges due to U.S. citizens. The the international perception of the United States and its precedent for doing so is strong. Presidents have detained policies. He has made numerous trips abroad, making enemy combatants in every major conflict in our history. speeches to appeal to foreign audiences. Here at home, he has The legal and policy issues that converge at Guantanamo faced criticism that he is “apologizing for America.” are more than symbolic. They have serious implications The President’s “image rehabilitation” mindset is not a for our security. In fact, we saw a glimpse of the problems new development. One of his major campaign themes was created by treating terrorists as criminals on Christmas Day. that “America’s ability to lead is set back because we are After 50 minutes of questioning, accused bomber Umar perceived as arrogant.” He Farouk Abdulmutallab was has told Europeans we have read his Miranda rights, been dismissive, even derisive. including the right to remain Accordingly, upon taking silent. He took us up on that. office the President lost no After outcry here at home, time in his quest to gain greater the Administration responded international popularity when by leaking to the media that he announced on January 22, Abdulmutallab resumed 2009, he would close the cooperating sometime later. Guantanamo Bay detention But, even effective “spin” facility within a year. from the White House press Some people heralded this office cannot minimize the move as an important symbolic danger of failing to get timely gesture. But the GTMO information at the point decision is much bigger than of capture to help prevent that. A number of fundamental additional terrorist attacks. legal and policy issues The President seems to surrounding our effort to protect be learning the hard way that the nation from terrorist attacks when it comes to national come together at Guantanamo. security, style does not Among the questions are: does relegate substance irrelevant. every captured terrorist have Since his announcement that The President seems to be the full due process rights of Guantanamo would close, he learning the hard way that when American citizens? How much has discovered a whole host of should we weigh the opinion problems and complications it comes to national security, of foreign governments and which have prevented him style does not relegate publics in formulating our from keeping his self-imposed substance irrelevant. national security policies? deadline. He has been forced Is the effort to stop terrorist to abandon his effort to try key attacks primarily a war or a criminal enforcement action? terrorists in New York City and he also has lost the publicity The facility at Guantanamo is ideal for housing and trying battle over the cost of converting a domestic prison to house terrorists. It is a carefully controlled environment. It is largely Guantanamo detainees. Both instances have been public new construction and state-of-the-art. It is isolated, simplifying relations embarrassments for the President and his Attorney security concerns, with detainees finding it difficult to escape General, and have helped leave aspects of our security hanging and sympathizers finding it difficult to reach. in the balance. Perhaps more importantly, Guantanamo facilitates treating At their core, these public relations snafus show just how captured terrorists as enemy combatants rather than affording difficult it is to ground policy in symbolism. Sure, symbols 14

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the time to change that. and symbolic acts are real and can matter. The fight against Any President’s first responsibility is to protect and terrorists is, in part, a war of ideas. If young Muslims are defend the country. Winning greater international favor and joining the terrorist ranks faster than the West can remove cooperation is part of this duty and can contribute to American them from the worldwide battlefield, we are losing the fight. national security. However, international image campaigns are So effective efforts to persuade young people to pursue more no substitute for real and effective actions to thwart terrorist constructive and peaceful ways to address their grievances attacks. must have a high priority. The facility at Guantanamo But symbolic gestures are not gives the United States a unique the same as effective programs. We cannot allow our opportunity to deal with terrorists We cannot allow our terrorism as enemy combatants and to keep policies to devolve into a quest for terrorism policies to devolve them off of the battlefield. It is not international popularity. Doing into a quest for international a capability we should throw away so would not only be fruitless and popularity. to keep a campaign promise. unobtainable, it would actually America’s security demands increase the dangers we face. more than on the job training. Positive perception is Security trumps symbolism – an important diplomatic and hopefully the President now recognizes it. RF communications tool. However, I suspect that there is a 7/20/07 7:31 PM Page 1 difference in how people in a number of other countries respond Mac Thornberry represents the 13th District of Texas in the to poll questions based on how they are asked. There is also a U.S. House of Representatives. A member of the House Armed high likelihood that people around the world do not believe that Services Committee, he serves as Ranking Member on the the U.S. should tie its own hands in stopping terrorist attacks. Permanent Select Subcommittee on Technical and Tactical The fact is that the world counts on the United States to lead the Intelligence. He also serves as a member of The Ripon efforts to stop terrorists. Both our domestic security and that of the world depend on our leadership in this realm. Now is not7.375" Society’s Honorary Congressional Advisory Board.

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RIPON FORUM Spring 2010

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Articles

The Trillion Dollar

Gap

Susan K. Urahn The news that the national Accounting Office, recommend that accounts for more than half of the economy may be out of deep water any state should keep its pensions trillion dollar gap. couldn’t be more welcome. But many 80 percent funded or higher. But 21 Some states are just starting states are still in danger of drowning. states are currently below that level, to save for their retiree health Unemployment, foreclosures and and eight—Connecticut, Illinois, care liabilities, largely because of Medicaid spending are already Kansas, Kentucky, Massachusetts, accounting changes recommended hitting the states hard. And there’s Oklahoma, Rhode Island and West by the Governmental Accounting another significant bill coming due: Virginia — are short of their liability Standards Board, which were released public pensions and in 2004 and went into retiree health care. effect in 2006. But the According to a 50-state average for recent study by the savings toward health Pew Center on the care liabilities is States, there is a $1 only about 7 percent trillion gap between of total costs, and the amount of money 40 states fall below states have set aside that very modest bar.  to pay employees’ Twenty states have retirement benefits nothing saved to and the $3.35 trillion cover health care and price tag of those other non-pension promises to current commitments.  In and retired workers.   general, states This estimate is continue to fund conservative: Since retiree health care most states assess their on a pay-as-youretirement plans on go basis. For states June 30, the analysis offering minimal As of fiscal year 2008, states were short does not fully reflect benefits, this may the severe investment cause little problem. $452 billion of the $2.8 trillion needed to declines in the second But for those that pay their pension bill. half of 2008 before have made significant the modest recovery promises, the future of 2009. As of fiscal year 2008, by more than one-third. fiscal burden will be substantial. states were short $452 billion of The situation for retiree The broader economic effects the $2.8 trillion needed to pay their health care and other non-pension also will be considerable.  How pension bill. That gap will continue benefits  (such as life insurance) well states manage their employee to grow as states fully account for the is even more troubling.  The total retirement costs will play a large role dramatic investment losses in 2008 liability for these programs — $587 in determining how much money is and 2009 — leaving states struggling billion — is substantially smaller available for other priorities.  Every to fund their pension plans. Experts, than the total pension bill. But almost dollar fed to that growing liability including the U.S. Government 95 percent of it is unfunded, and that is a dollar that cannot be used for 16

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education, public safety or other 2006, that number had shrunk to six save $15 million a year, or about 10 needs. states. By 2008, only four states— percent of Vermont’s current budget Left unchecked, this problem Florida, New York, Washington and shortfall. This deal was possible will become a crisis for future Wisconsin—could make that claim. because concerns related to the generations. But it already poses a This challenge is dire, but can be retirement security of workers were serious fiscal challenge for today’s solved.  There are three actions states addressed along with the need to taxpayers. The share of state budgets can take.  First, they can fully and control costs.  that goes to meet these costs is regularly fund their annual required A similar story played out in already sizable.  In 2008, states contribution for retiree benefits; Nevada last year when different needed nearly $108 billion to pay second, they can reduce their liability sides of the political spectrum gave their full required contributions for by cutting benefit levels, sharing ground in a debate over retiree pensions and retiree health care.  To costs and more of the investment benefits and a severe state budget put that figure in perspective, states risk with employees and taking gap. The Chamber of Commerce spent about $152 billion that year on other measures, such as raising the dropped its longstanding support of higher education.  retirement age; and third, they can a defined contribution plan for public How did this happen?  Economic improve how retirement systems sector employees and endorsed a recessions and investment losses are governed and how pension broad tax increase package to help played a role. But the trillion dollar fund investments are overseen and balance the state budget. Republican gap primarily reflects states’ lack of managed. lawmakers said they would support discipline.  Over the last 10 years, These fixes won’t deliver a tax increase but only if Democrats many states shortchanged pension dramatic results overnight — but agreed to tighten the pension system plans in both good times for new hires. The budget and bad. Too often, policy passed. Under the reform, makers kicked the can new workers cannot begin That gap will continue to grow down the road, increasing receiving benefits until benefits without age 62, while current as states fully account for the considering the price tag employees can retire at 60 dramatic investment losses in 2008 or failing to make their with 10 years’ service or required annual payments.  at any age with 30 years. and 2009—leaving states struggling Like a credit card holder The plan also reduces the to fund their pension plans. who makes a minimal or cost-of-living adjustment no monthly payment while and the multiplier used to adding new purchases, calculate benefits after an states have built up a large employee retires. balance that becomes harder to pay even small changes made today can Steep pension fund investment off with each passing day. And the have a big impact in the future.  For losses in the past two years have made larger the unfunded liability, the example, Minnesota’s 1989 decision it clear that states cannot sit back and higher the annual cost. to raise its retirement age by one year hope the market will deliver enough Contrasting New York and has saved taxpayers $650 million returns to close the trillion dollar gap.  New Jersey illustrates how poor over the last two decades. Meanwhile, swelling numbers of management affects the bottom line.  Although changing benefits can baby boomers are nearing retirement, In 2002, these neighbors both had be very difficult, there are states that and will live longer on average than fully funded pension systems.  Over have done so. For example, early earlier generations.  The writing is on the next six years, New York made this year, state leaders in Vermont the wall: Ignoring the problem in the its required annual contributions, but wanted to make dramatic cuts in face of these converging factors will New Jersey did not.  As a result, New pension benefit levels. The Vermont ensure far more serious budget trouble Jersey’s cost burden for 2008 was $1 teachers union bitterly opposed this, for states in the future. RF billion more than New York’s, even but also conceded that the status quo though New Jersey’s total pension was unsustainable. A compromise Susan K. Urahn is the Managing liability was $15 billion less than the was reached in January 2010 that Director of the Pew Center on Empire State’s. will result in most teachers working the States. The Pew Center on The results of this decade of additional years and making higher the States’ report “The Trillion irresponsibility are startling.  In contributions to the pension fund but Dollar Gap” is available at: 2000, just over half the states had receiving a larger pension check on www.pewcenteronthestates.org/ fully funded pension systems.  By retirement. The state will initially trilliondollargap. RIPON FORUM Spring 2010

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The Sino-American Relationship Why keeping it strong advances our interests CARLA A. HILLS Our nation has struggled with an economic crisis of historic proportions since December 2007. The pain has been wide and deep. Americans are suffering from job losses, home foreclosures, and bankruptcies that have caused both consumer demand and new investment to plummet. This same crisis forced China to shutter hundreds of manufacturing and assembly plants which left some 20 million Chinese unemployed. Yet China appears to have come through the global economic turmoil with relative ease. Last year, China grew by close to 9 percent, maintaining its position as the world’s fastest growing major economy. This year, China is likely to replace Japan as the world’s second largest economy and its largest trading nation. The severity of the financial news at home and the speed with which China has recovered have intensified the fears of many Americans that their future economic opportunities will be eroded as 1.3 billion Chinese become ever more active in the global market place. Economic hardship inevitably stokes economic nationalism. Protectionism has grown in both countries. According to a list compiled by the U.S.-China Business 18

Council, our 111th Congress through March 1 of this year has introduced more than 100 bills that affect China – most in a negative way – ranging from efforts to amend the 1930 Tariff Act to making exchange rate misalignment by a foreign nation actionable under our countervailing

and antidumping laws to inserting Buy American provisions into a wide range of legislative measures. China’s government for its part has responded with trade and investment restrictions of its own, ranging from its disapproval of efforts of a major U.S. company to acquire a Chinese firm to requiring foreign investors to share technology in order to participate in China’s government procurement market. As headlines in our respective RIPON FORUM Spring 2010

newspapers attest, bilateral trade disputes have multiplied. The United States has taken action to restrict the import of Chinese tires, steel pipe, magazine quality paper, and salts, whereas China has moved to restrict U.S. movies and books, poultry, auto parts, and industrial acids. These trade frictions – coupled with the recent bilateral tensions over U.S. sales of defensive weapons to Taiwan, President Obama’s meeting with the Dalai Lama, and our differing assessment of risk connected to Iran’s nuclear ambitions – have added to Americans’ concerns about the strength and solidarity of the Sino-American relationship. Increasingly, the question is posed: can the world’s largest economy work constructively with the world’s fastest growing economy to enhance the future prosperity and security of both? Or have our increasingly competitive economies, coupled with differences in our governance and cultures, become too great to enable us to harness our respective strengths to deal effectively with today’s challenges? I believe that we can, should, and must work constructively together, and by doing so we can build habits of cooperation that will help us to deal effectively with new challenges


as they arise. with China, and it advances both While protectionism will not My view is that the economic our economic and foreign policy be stopped with pledges, it could prospects of both countries -- and interests for us to build upon that be stopped if our two governments indeed the prospects for growth of relationship. took the lead at the upcoming the global economy -- are dependent China is likely to be an engine G-20 meeting to press for a real upon a strong and vibrant economic of growth in the decade going commitment to carry out the leaders’ relationship between the United forward. It represents a huge market promises to keep their markets open States and China. with an expanding middle class. In and themselves set an example. Trade data shows unequivocally his 2010 State of the Union address, In addition, the United States that in spite of our problems, the President Obama announced his and China need to work together Chinese market offers Americans goal of doubling U.S. exports over to push the Doha Round to a real opportunity. Since 2001, when the next 5 years and, in doing so, successful conclusion and, in so China became a member of the World to create 2 million jobs. That is doing, create new and exciting Trade Organization, its markets have an accomplishment that has rarely, opportunities for American and become increasingly open and our if ever, occurred. But it certainly Chinese entrepreneurs, while giving business opportunities in China have cannot occur without access to the global economy a real boost. soared. China’s markets. According to studies conducted Between 2000 and 2008, our We are more likely to accomplish at the Peterson Institute for sales to China have increased more that goal by keeping our bilateral International Economics, tariff than 340 percent, a growth that is markets open while working cuts for agricultural and industrial more than four times faster than our with China to further open global goods, reductions in farm subsidies, sales over the same period and market opening of time to the rest of the proposals for services world. That growth in sales now under discussion My view is that the economic was felt across America. could boost world output Over that eight year period, between $300 and $700 prospects of both countries -- and virtually every state in the billion a year. We need indeed the prospects for growth union saw near triple digit that growth now. of the global economy -- are increases in its exports to Open markets make China. a difference. America’s dependent upon a strong and Significantly last year, GDP would be more than vibrant economic relationship in the midst of the Great 20 percent smaller today Recession, according had it not led in opening between the United States to U.S. Department of global markets in the and China. Commerce statistics, our years following World exports to China held War II, and it is thanks to steady while our exports to open markets that China markets. That would enhance the the rest of the world fell by nearly was able to lift hundreds of millions growth of our domestic economies 20 percent. of its people out of poverty. while contributing to the expansion China remains our third largest For all the challenges that the and stability of the global economy. export market behind Canada and United States and China face today, it However, that is not happening. Mexico, and, importantly, it is our is overwhelmingly in our respective At each of the three G-20 fastest growing export market. Last national interests to maintain a meetings, the assembled leaders year, computers and electronics, close, candid, constructive, and pledged not to erect barriers to crop production, chemicals, and collaborative relationship. imports, not to violate WTO rules, transportation equipment comprised As President Obama has said: and not to impose export restrictions. our top four exports to China. These “The relationship between the Yet the report published this past are all sectors that generate good United States and China will shape September by Global Trade Alert jobs. the 21st century.” RF documents that G-20 members While our purchases from China have put in place over 120 blatantly last year declined by roughly 12 Carla A. Hills is the Chair discriminatory measures with percent, our imports from the rest of and CEO of Hills & Company, more in the pipeline. The United the world fell by more than twice that International Consultants. States and China were among the amount. In short we have a strong She served as U.S. Trade offenders. and growing commercial relationship Representative from 1989 to 1993. RIPON FORUM Spring 2010

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A Great Time to Start a Business (As long as Washington doesn’t get in the way) Dan Danner We have looked at the state of continues, and to help existing That horizon is filled with small business in our union, and it is businesses recover and grow again, unknowns, from the true costs of not good. there are some things policymakers recently passed health care legislation Our Small Business Economic should remember. to cap and trade, from soaring deficits Trends monthly report, which has First, recognize the problem. to the need to come to grips with them, tracked small business conditions Second, do no harm. from paid family and medical leave to for more than 35 years, shows that This recession has severely limited card-check legislation, from expiration small business owners nationwide are small business’ ability to generate of the 2001 and 2003 tax cuts to state struggling to keep decisions about their their doors open. finances. Optimism among Policymakers small business can’t expect owners declined small business in the latest report owners, facing as small business difficult economic owners experienced circumstances weak sales and anyway, to commit negative earnings. themselves to To put the investing in new current conditions employees or in perspective, the equipment without numbers we’re acknowledging and seeing now are lower revealing the policythan they were in the inspired costs that 1981-82 recession, will be imposed on and have been that them. way for far longer. With that in So is it a mind, Washington …more than half of the companies on the great time to start a should send an business? 2009 Fortune 500 list were launched during a immediate signal According to small business recession or bear market, along with nearly to the Ewing owners that their Marion Kauffman taxes won’t be half of the firms on the 2008 Inc. list of Foundation, more raised. About 75 America’s fastest-growing companies. than half of the percent of small companies on the business owners 2009 Fortune 500 list were launched jobs as poor sales depress balance are pass-through businesses and pay during a recession or bear market, sheets, banks are reluctant to lend, and their business tax at the individual along with nearly half of the firms on confidence remains negative due not level, so with the 2001 rates sets to the 2008 Inc. list of America’s fastestonly to the lack of visible economic expire they’re facing a tax increase if growing companies. If the government progress, but also to a series of policy Congress fails to act. If a business is would like to ensure that this trend threats that darken the horizon. struggling to make ends meet, why 20

RIPON FORUM Spring 2010


would Washington take any money investment will be subject to a lower effectively demanding greater initial out of those businesses at the same tax rate. investment. The proposed increase to time they’re asking them to hire new Remember, the vast majority of $20,000 in deductible start-up costs is workers? small business owners pay their taxes a start. The current tax rates should be at the individual level, so allowing the Uncertainty about policy changes kept in place for all small businesses. 2001 and 2003 lower tax rates to stay that will increase business costs is However, some propose raising in place will benefit those businesses. a growing concern among small taxes on those businesses that report It will also give them some sense business owners struggling through more than $250,000 in income. An of certainty they can depend on as a tough economic climate. SeventyNFIB Research Foundation poll, they make critical decisions about five percent of small business owners combined with U.S. Census Bureau expanding their business. think that now is not a good time to statistics, indicates that expand their business. the businesses most likely And when asked what is to face tax increases are the most important reason businesses that account for influencing their plans a substantial portion of the for expansion, political workforce. climate ranks second with The NFIB survey only economic conditions shows that about 10 percent receiving more votes. of all small business owners That uncertainty report more than $250,000. over how numerous Furthermore, the businesses legislative initiatives from most likely to pay more Washington will impact the taxes are firms with 20 to cost of running a business 250 employees. In fact, is causing too many more than 30 percent of small business owners to firms with between 20 conclude that they just to 250 employees would can’t afford to take the risk see their taxes increase if to expand their business the $250,000 threshold or hire new employees. If expires. elected leaders want small Regardless of how business owners to resume many small businesses their traditional role as would be impacted by this our nation’s job creators, …Washington should send an tax increase, simply drawing they must realize that this immediate signal to small business a line in the sand at $250,000 uncertainty is impeding owners that their taxes won’t be is a blunt instrument, job growth. meaning that some small If the Administration raised. business owners will see and Congress truly want their taxes increase. When to help small businesses, Two more targeted policies would state and local tax rates – many of they should alleviate small business encourage the formation of new firms. which are also going up – are included, owners’ fears over taxes, as well as One easy fix would be to simplify plus new taxes added in the health care job-threatening cap and trade and the home office deduction, offering reform law, these entrepreneurs could card-check legislation, which should a flat rate instead of the current see their tax rates climbing above 50 be eliminated from Washington’s complex calculations that lead many percent. domestic agenda. entrepreneurs to skip the whole idea. In addition, Congress should also Only by creating a climate in Another important step would be extend the lower capital gains tax rate which entrepreneurs have confidence to liberalize the tax write-offs a new passed in 2003. If a business has to in our country’s direction will we be business can claim in its first year. sell an asset, now is not a good time to able to turn this economy back on the Current tax policy allows an immediate increase the tax paid on the disposition path to growth and prosperity. RF $5,000 deduction for investments in a of that asset. Keeping the rate lower new business with additional expenses should also be an incentive to invest Dan Danner is President and written off in subsequent years, in capital assets with the certainty CEO of the National Federation of reducing liquidity and cash flow, and that any gain later realized on that Independent Business. RIPON FORUM Spring 2010

21


Another

Bellwether from Massachusetts

State opposition to Project Labor Agreements sends a clear signal to Administration and its union allies DAVID TUERCK Until recently, few people looked for which PLAs are well-suited. provisions, the Order encourages to Massachusetts as a predictor of This argument ignored the fact federal contractors to follow union political trends.  It was too blue to be that the Bush Administration managed work rules and hire all or most of a bellwether.  The election of Scott to initiate almost $60 billion in large their workers through union halls Brown changed that.   federal projects without PLAs.  It on any federal project costing $25 Brown’s upset victory this past also ignored the fact that there was million or more. January to fill the Senate seat held not a single cost overrun or delay The Obama Executive Order by Edward Kennedy throughout the Bush sent shock waves presidency that could through the political be attributed to the establishment.  It also absence of a PLA. sent a clear signal that people have Popular with serious concerns Unions about the level of federal spending in Unions claim Washington. that PLAs guarantee And yet Brown’s access to skilled labor election may only be and avoid “costly the tip of the iceberg delays.”  Many when it comes to believe this claim messages being sent is nonsense.    No by Massachusetts contractor needs a voters.  For if a union hiring hall to recent poll by the find skilled workers, Beacon Hill Institute especially if the is any indication, skilled workers are …people are not just concerned with the people are not just part of his own growth of the federal government under concerned with the workforce and not growth of the federal members of unions to this administration, but they are also government under begin with.   increasingly concerned with its direction. The real purpose this administration, of the hiring hall is but they are also to put the union in increasingly control of the hiring process, not to concerned with its direction. rescinded an Executive Order made serve as a recruiting tool.  And it’s the At issue is one of the first in 2001 by President George W. union, once a project gets underway, Executive Orders made by Barack Bush that prohibited PLAs on federal that decides whether or not there will Obama after he was sworn in as projects.  In reversing this decision be delays.  Nonunion contractors, President last year.  The Order made by his predecessor, President whose employees represent 85 concerns Project Labor Agreements, Obama argued that large federal percent of the construction workforce, or PLAs for short.  Under its projects pose “special challenges” 22

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of Independents and 52 percent of are strongly opposed to PLAs ─ and would consider objections to PLAs. Democrats oppose the requirement.  for good reason.   They won’t have far to look.   The poll reveals that even among PLAs reduce the competitive The People Object households with union members, advantage of nonunion contractors, According to a survey conducted 59 percent are opposed to the hiring who are otherwise not bound in February by the Suffolk University provision. by restrictive union work rules Political Research Center for the Opposition is consistent across when bidding on and performing Beacon Hill Institute, 69 percent voters segmented according to age, construction projects. of Massachusetts voters oppose gender, race, and attitudes toward Last September, the Department requiring private contractors to hire candidates for governor.    Voters of Labor, in keeping with President workers through union halls.  This were also asked which candidate Obama’s Executive Order, attempted hiring rule is a key feature of PLAs, they supported in the recent special to place a Project Labor Agreement and voter disapproval extends by election for U.S. Senate.  Forty-nine designation on a new multimillionimplication to PLAs themselves.  percent said they voted for Scott dollar Job Corps Center in Manchester, The survey suggests that public Brown. The same poll found that 61 New Hampshire. The fact that only 8.7 opinion of PLAs may be sensitive percent of voters view the newlypercent of the construction workers in to perceptions about the degree to elected senator favorably.    New Hampshire were unionized did which construction workers are It would be ironic if, in not deter the Labor Department from unionized.  Seventy three percent protecting its union base, the Obama this attempt.   Administration further The Job Corps jeopardized its standing Center was the first major with the voters as a result PLA test for the Obama According to a survey of its “encouragement” of Administration.  The timing conducted in February by the PLAs.  Under the stimulus was important. Organized Suffolk University Political bill, the Administration is labor stands to gain from the committing $28 billion to infrastructure projects in the Research Center for the Beacon transportation construction pipeline under the American Hill Institute, 69 percent of projects where PLAs could Recovery and Reinvestment come into play.  Perhaps Act.  Unions would like to Massachusetts voters oppose voters don’t believe that earmark much of that public requiring private contractors to this money should be construction money with hire workers through union halls. spent shoring up the union PLA designations.  monopoly over federal Unfortunately for the construction projects.   President and his union of the respondents estimated the On the other hand, this allies, however, the New Hampshire fraction belonging to unions to be 40 Administration has shown its capacity PLA has been put on hold.   The percent or more. In fact, only about to turn a deaf ear to bellwethers of Associated Builders and Contractors, 20 percent of private construction voter sentiment.  It will be interesting a trade group for nonunion workers in Massachusetts belong to to see what the Administration construction firms, and one of its unions. Respondents were given this does with the Job Corps Center in members, North Branch Construction fact before they were asked about New Hampshire, a state in which of Concord, joined New Hampshire hiring through union hiring halls. unions enjoy less popularity than in Senator Judd Gregg in complaining The poll, which carries a Massachusetts.   that the PLA would be harmful to the margin of error of +/4.4 percent, Should it insist on a PLA despite majority of local workers. Opponents captures a nuanced attitude toward the myriad of objections raised by also pointed to studies by the Beacon organized labor in Massachusetts. contractors and political leaders in the Hill Institute showing that PLAs raise The same poll shows that a majority state, the Obama Administration will construction costs by as much as 20 (52 percent) of Massachusetts voters once again offer an important clue to percent. have a favorable opinion of unions.  its ideological mindset. RF In November, almost a month However, the requirement that after North Branch filed a protest construction contractors hire their David G. Tuerck is Executive with the Government Accountability workers through union hiring halls Director of the Beacon Hill Institute, Office, the Labor Department is opposed by almost every segment and Chairman and Professor of declared that it was cancelling the of the electorate.  Eighty eight Economics at Suffolk University in bidding process for the $35 million percent of Republicans, 76 percent Boston. project and starting over ─ saying it RIPON FORUM Spring 2010

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Driven to Distraction

Mixed messages from Washington when it comes to text bans and technology in our cars BILLY PITTS drivers to call immediately if a missing child or suspicious Transportation Secretary Ray LaHood deserves praise vehicle is seen. for focusing public attention on distracted driving. The federal government is also launching in The market today is flooded with electronic devices cooperation with cell phone companies a federal alerting that can be used in motor vehicles and millions of motorists system, called the Commercial Mobile Alert System are using them with reckless abandon, putting themselves, (CMAS). The Federal Communications Commission their passengers and their fellow travelers in danger. expects this new system to be up and running by the end We’ve all seen these accidents waiting to happen.  A of next year.  The new CMAS-capable phones will receive driver holding up traffic while he or she, with head down, geo-targeted notification of presidential alerts, hurricanes, finishes a text message, a car swerving into another lane of terrorist attacks, chemical spills, and evacuation routes.  traffic while the driver reads an email, or a driver recklessly Amber Alerts would be sent to a person’s cell phone, as maneuvering through traffic with one hand on the wheel well.  Moreover, the messages would be sent in text format.  and the other performing that infamous one-handed dialing This is not only inconsistent with Secretary LaHood’s antiexercise.  texting initiative, but also offers up another classic example Secretary LaHood has seen the future of unsafe of the right hand not knowing driving with even more use of what the left hand is doing cell phones, radios, iPods, GPS The federal government is when it comes to the federal navigation devices, TV screens, launching in cooperation bureaucracy. back-up cameras and yetClearly, technology can invented electronic devices, all with cell phone companies a be both a curse and a blessing.  of which distract even the most federal alerting system, called It has freed up drivers as agile drivers from watching the early model cars required the Commercial Mobile Alert road. manipulating accelerator and These distractions are System (CMAS). choke levers in the middle of heaped on others that have the steering wheel or shifting competed for drivers’ attention gears on the steering wheel column.  Car radios provide for years:  food and drink, checking the speedometer or critical traffic information and emergency notices. GPS gas gauge, reading roadmaps and road signs, engaging in Navigation devices and iPod connections are here to stay.  conversation or just enjoying the scenery. Soon, most or all devices will be hands free and we will be We can’t turn back the clock.  Distractions are driving “talking cars.” There are also “heads-up” displays inevitable.  But the Secretary is right to call attention to that project your speed or navigation arrows onto your the problem, educate the public and offer incentives to windshield so your eyes don’t have to wander from the limit distractions whenever and however possible.  The road. federal government can play a useful role in dictating But there are legitimate concerns about real prospects driving habits and restricting technology use, but that role of cars being equipped with Facebook, Twitter and has to be limited.  Ultimately, it is up to the people to act television-receiving capabilities, particularly if they are responsibly. accessible to the driver. I am concerned that government will go too far There are now cars capable of automatically reducing in trying to dictate human behavior and hope we fully speed as it approaches an obstacle or alerting the driver understand the implications of prohibiting cell phone use when there is a car approaching in his “blind spot” or if he is so that it does not also produce undesirable and unintended swerving out of his traffic lane. The latter probably would consequences.   For example, forcing cell phones into the be a cheaper safe guard for the public than the placement glove box seems to run counter to federal and local Amber of ‘rumble strips’ along side every highway. Alerts that now appear on highway traffic signs and urge 24

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electromagnetic interferences. Here is another area the Hopefully, the Department of Transportation and the Department of Transportation and the FCC can inquire and FCC will find enough wireless spectrum so drivers can determine what, if anything, needs to be done. be notified of road conditions. As our infrastructure is Secretary LaHood needs to press ahead with being rebuilt and repaired there are stretches of road that public education and common sense incentives for can be perilous if the driver is not aware of the changes. state governments, car Wireless notification could designers and drivers surely be used to let drivers themselves.  But we all [CMAS] is not only inconsistent know that the emergency hope the Secretary will vehicle siren that they hear with Secretary LaHood’s antistop short of attempting is coming from the left texting initiative, but also offers up to force change in human and not behind as all of us behavior in a free society become distracted trying to another classic example of the right where force sometimes respond to the sound. hand not knowing what the left doesn’t foil bad behavior, The recent recalls in it only encourages it. hand is doing when it comes to the the news suggest that we More than anything, also need to know more federal bureaucracy. he should make sure that about electromagnetic technology remains a interference in automobile partner in auto safety, not something to be discouraged. RF computer systems.  Any hot rod enthusiast or amateur car mechanic understands the role of electromagnetic Billy Pitts is a former House Leadership staffer and interference on car radios. Whenever they “souped up” serves as a member of The Ripon Forum’s editorial board. the coil or spark plug wires, they had to be sure that the He served on the FCC CMAS Advisory Group, and was dashboard was shielded. The examination of potential also a member of the Hurricane Katrina Technology car software glitches may reveal the need to shield Impact Commission. our microprocessors and magnetic relays from nearby

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25 PM 4/2/10 12:10:04


You Say You Want a Revolution? If the Tea Party takes on the Maverick, a new political party could emerge LOU ZICKAR Supporters of the Tea Party Movement say they are dedicated to the ideals and principles of the Founding Fathers.  Wouldn’t it be ironic, then, if they succeeded in forcing from office a man who has shed as much blood for his country as any Patriot in the Revolutionary War? That is exactly what might occur in Arizona, where Tea Party activists are considering whether to endorse former Congressman J.D. Hayworth over former POW and current Senator John McCain in the state Republican primary on August 24th.  The activists apparently are upset with McCain because, they say, he has a history of working across party lines on issues such as immigration and betrayed their conservative ideals by voting for the TARP bailout in 2008.  McCain clearly has a long record of bipartisanship, and has never been shy about putting his name on a Democratic bill if he thought it was in the public’s best interests.  But criticizing him for being a big spender ignores the fact that he consistently ranks among the staunchest fiscal conservatives in the Senate, and is perhaps the person most responsible for today’s push to ban congressional earmarks.   It also ignores the possibility that McCain, who holds a large but not insurmountable lead over Hayworth, may choose to run as an Independent if the Tea Partiers come out against him and his lead vanishes as a result.   For a number of reasons, that possibility is not as far-fetched as one would think. For one thing, it suits McCain’s temperament, and would be in keeping with his reputation as a maverick, which for some reason he recently downplayed in an interview with Newsweek but, in fact, has admirably demonstrated throughout his career.  It would also be 26

consistent with the example set by his political ally in the Senate, Joe Lieberman, who ran and won as an Independent after being defeated by liberal Ned Lamont in the Connecticut Democratic primary in 2006. Beyond this, running as an independent would be in keeping with the example set by McCain’s political hero, Theodore Roosevelt, who bolted the Republican Party when he was denied the GOP nomination in 1912 and ran for President on the Bull Moose ticket that year. Roosevelt lost his bid to return to the White House, but his decision to press on in the face of adversity no doubt holds some appeal for McCain, who has never been afraid to go it alone in pursuit of a cause in which he believes. Of course, McCain wouldn’t be alone if he were to undertake such an effort.  He has a group of longtime staff members who would be right by his side.  In this regard, it should be noted that two of these staff members -- his former Chief of Staff Mark Salter and his former strategist John Weaver -- are currently working on Independent Tim Cahill’s campaign to become Governor of Massachusetts.  If McCain needs guidance on how to run as a third party candidate, he would not have to look any further than these two loyalists and veteran political hands. McCain is nothing if not a realist, and for him to run as an Independent, he would have to know he had a good shot at winning in November.  Here, too, the numbers are on his side.  McCain won nearly 80 percent of the vote in his Senate reelection bid in 2004, and nearly 70 percent of the vote in winning reelection six years earlier in 1998.  In these and his previous victories, he demonstrated a bipartisan appeal that -- Tea Party support or no -- would be very difficult for a hard right candidate

RIPON FORUM Spring 2010


unable to do in 2008 -- select the running mate he wants, like J.D. Hayworth to beat. In fact, one could imagine a scenario where John not the one his consultants told him to pick. More than anything, though, it would be a campaign McCain wins reelection to the Senate by such a large margin running as an Independent that he develops that would allow McCain to run  to the right of Barack a new, national following that is broader than the one Obama and to the left of the Tea Party.  A campaign such as this one  would leave he currently has.  It would him well-positioned to win be a following wedded not …McCain, who holds a large not only independents who are to a political party, but to concerned about the explosive the 40 percent of Americans but not insurmountable lead growth of government under who consider themselves over Hayworth, may choose this administration, but unaffiliated voters and reside Republicans who are turned in the political center.  It would to run as an Independent off by the explosive rhetoric of also be a following that would if the Tea Partiers come out the far right.  leave McCain well-positioned against him and his lead It could also make John to mount a third and final bid McCain the Founding Father for the Presidency – this time vanishes as a result. of a new center-right governing running as an Independent.   coalition in the United States -Owing to his age, he would pledge to serve only one term.  But the campaign a coalition that would give him one last shot at winning otherwise would be virtually identical to the one McCain the White House, and one that would owe its creation to waged in the 2000 Republican primary when he took on the activists who once targeted him for defeat. Now, that truly would be revolutionary. RF the establishment and nearly upset party favorite George W. Bush.  It would be a campaign that would allow him to do what he does best -- run as a maverick.  It would also be a campaign that allows him to do what he was Lou Zickar is the editor of the Forum.

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Name: John Hoeven Hometown: Minot, North Dakota Occupation: Governor of North Dakota Previous Jobs: President, Bank of North Dakota; Executive Vice President, First Western Bank & Trust. Individual(s) who inspired me as a child: My parents. They truly inspired me and have always been people of great character. Historical figure(s) I would most like to meet: George Washington. He epitomized true leadership in so many ways and more than any other single figure, he led the way forward in the founding of our great nation. Issue facing America that no one is talking about: We must create more legal, tax and regulatory certainty, so that businesses can invest and hire people. Right now, investment by business enterprises both large and small is held on the sidelines because business leaders face an unfriendly business environment. One example is in the energy industry, where utility, energy and venture capital companies are holding off on investing in new technologies that could produce more domestic energy with better environmental stewardship. They do not know what the rules of the road are for recoupment of their investment. We must do better in creating a responsible, dependable business environment at all levels of government to get our economy moving again, and get people back to work. What the GOP must do to reclaim its majority: Republicans must present our solid solutions for growing the economy, reforming health care and reducing the deficit in a strong and positive way, and act on them. 28

RIPON FORUM Spring 2010


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The Ripon Society

2010 Policy & Politics Dialogue Series

John Boehner

Dave Camp

Pete Sessions

Wally Herger

Johnny Isakson

Kevin Brady

John Kline

The Ripon Society’s Policy & Politics Series is a regular series of breakfasts, luncheons, and other events that look at the issues of the day and the challenges facing us as a Nation.

Paul Ryan

John Cornyn

John Linder

Charlie Crist

Pat Tiberi

George Lemieux

Charles Boustany

Mike Castle

For more information on these and other speakers in our Policy & Politics Series, please visit our website at www.riponsociety.org or call us at (202) 216-1008.

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Ripon Forum Spring 2010  
Ripon Forum Spring 2010